SEC's Schapiro: Necessary To Regulate Hedge Funds

Date: Monday, August 31, 2009
Author: Dow Jones Newswire

Securities and Exchange Commission Chairman Mary Schapiro said Friday that it's necessary to regulate hedge funds since their impact on markets is too large for the federal government to ignore. "We need to have them registered so we understand who's in the space and what they're doing," she told Fox Business Network, emphasizing the need for more reporting and disclosure to detect possible manipulation. "We can reconstruct trading practices and patterns so that we can bring those cases and enforce the rules against things like manipulation and insider trading," she added.

Web site: www.foxbusiness.com

-Dow Jones Newswires; 212-416-2900

(Updates with comments on reviews of markets, flash trading, high-frequency trading; SEC's budget needs)

DOW JONES NEWSWIRES

Hedge funds must be regulated as their impact on markets is too large for the federal government to ignore, Securities and Exchange Commission Chairman Mary Schapiro said Friday.

"We need to have them registered so we understand who's in the space and what they're doing," she told Fox Business Network in an interview, emphasizing the need for more reporting and disclosure to detect possible manipulation.

Schapiro also said the SEC has begun to act on a request by Democratic Sen. Ted Kaufman to review the structure of the markets. "We are planning to do sort of a big concept release, ask a lot of questions about market structure," she said. "Have the rules and regulations kept up? What should we be focused on? How do we ensure a level playing field for investors? How do we deal with some of the information asymmetries that exist in the market today? How do we keep abreast of the technology?"

Additionally, the SEC will probe recent market innovations such as flash trading and high-frequency trading, she said. She's asked for a recommendation on how to eliminate inequities created by flash trading. The commission will also commence a "broader review" of markets that will include "dark pools, co- location, high-frequency trading and some of the other really recent innovations in the marketplace that have created this asymmetry of information and access for retail investors versus institutional investors."

However, the SEC's ambitious agenda will require more staff and financial resources, Schapiro said. "We could be multiple times larger than we are. We can't grow that fast ... So over the next several years I'd like to see the agency expand very significantly."

"We need significantly more money than we have at the moment...," she added. Schapiro did say, however, that the Obama administration and Congress have been supportive of the SEC's budget requests and that she's confident the commission will get what it needs.

Web site: www.foxbusiness.com

-Dow Jones Newswires; 212-416-2900